Forex Trader Top 3: US Jobless Claims, Durable Goods, German Consumer Confidence
Mark Whistler is the founder of www.WallStreetRockStar.com and is the author of multiple books on trading. Mark’s newest book, The Swing Trader’s Bible – co-authored with CNBC/Fox News regular guest Matt McCall – will be on shelves in late summer, 2008. In addition, Mark also writes regularly for TraderDaily.com and Investopedia.com.
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1. U.S. Jobless Claims Surprise
The News:
U.S. Jobless Claims surprised Wall Street by plunging 33,000 in the last week.
The Breakdown:
Catching bears by surprise, U.S. jobless claims dropped to 342,000 in April, helping to call the 4-week moving average to 370,000.
This week’s figures will likely have employment bears stumbling all over themselves in Thursday stories, trying to explain why the sky isn’t quite falling yet. What’s more, the report helped add additional support to the U.S. dollar, which is now trading roughly 30-PIPs off the recent low.
Finally, today’s employment numbers could help the FOMC make the decision to keep the Fed Funds Rate flat in its meeting next week. Something that could actually be beneficial for the economy, as keeping interest rates flat will help buoy the dollar and hence, take some premium out of crude.
The Bottom Line:
The U.S. is NOT out of danger yet, but things are slowly looking up. The Fed needs to look at the long-term consequences of high oil and commodity prices and act accordingly by, by doing things like not cutting rates again next week.
2. Durable Goods Disappoint
The News:
On Thursday, durable goods showed a 0.3% decline, versus the 0.6% gain expected.
The Breakdown:
Within the March numbers, one of the most glaring sore spots was the 0.5% decline in new orders for autos, while shipments also declined 0.5%. Clearly, consumers aren’t buying big ticket items right now.
However, when we remove transportation from the numbers, we see that new orders actually rose 1.5% for the month, which is actually quite healthy.
Slightly alarming, inventories were up 1.1% in March, which is a scary-high number. However, when we remove autos, inventories only climbed 0.6%; a more reasonable number by most standards.
The Bottom Line:
While consumers are not buying expensive items like autos right now, the March durable goods report shows some improvement within the economy.
3. German Business Confidence Plunges
The News:
On Thursday, Germany’s Business Climate Index clocked in at 102.4, below the anticipated 104.8.
The Breakdown:
The strong euro is taking a toll on what was one of the strongest Euro Zone economies. Today’s IFO report shows declines in the German business climate, current situation, expectations, trade & industry, manufacturing and construction.
High commodity prices are taking a large bite out of German business conditions, as businesses struggle to pass costs on to consumers, while paying higher input prices from the get go.
At this point, the overly-strong euro is clipping GDP growth in the Euro Zone, while also triggering pessimistic outlooks within the individual economies, as witnessed in today’s German IFO report.
The Bottom Line:
Clearly, the ECB’s press-gallivanting comments – in regard to potentially needing to raise rates, due to inflation, which recently took the euro to all-time highs – is a kick in the face to Euro Zone economies – which are already down on one knee.